My thesis applies the notion of relational contracts to explain seemingly counterintuitive vertical arrangements. The first chapter shows that, in the presence of spillovers between an upstream and a downstream firm, vertical integration reduces the downstream manager's present gains from shirking, making her promise to cooperate with the upstream firm credible. The second chapter shows that, after a European regulation prohibited exclusive territories, car dealership contracts switched to a mix of service standards and price ceilings, and argues that price ceilings were introduced to reduce the dealers' short-run profits from reneging on an informal "no-compete" agreement. The third chapter shows that, despite the even allocation of decision rights in dealership contracts, car manufacturers dictate performance standards ex post, and reward dealers through discretionary discounts. This suggests manufacturers are informally delegated to set standards, and use formal decision rights as a last resort against the dealers' temptation to overturn their decisions.